On the borders of prominence

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Aerial view of the Diosdado Macapagal Passenger Terminal at Clark International Airport, inside Clark Special Economic Zone in Angeles City, Pampanga

The Philippine economy is flourishing under an unparalleled surge of growth, and now the country is going through some growing pains. Traffic congestion is already strangling the productivity of businesses in Metro Manila’s central business districts, while the promised infrastructure projects designed to relieve the pressure loom still far out of reach. Meanwhile, more cars enter the capital’s roads each month, and new businesses attracted by the Philippines’ stellar growth need new places to set up shop. 

There is an urgent need, therefore, for a new economic hub outside Metro Manila to receive the next wave of growth.

Clark as the Philippines’ next international gateway

Filinvest Development Corp. (FDC) and JG Summit Holdings, Inc. (JGS) recently submitted a new multibillion-peso proposal to develop Clark International Airport as the country’s second international gateway. The proposal seeks to create a joint venture with the Bases Conversion and Development Authority and the Department of Transportation, with Singapore’s Changi Airports International as a technical partner.

Under the proposal, the consortium will aim to utilize the full potential of the Clark Freeport Zone and transform it to become a new hub for business, aviation, and tourism in the Philippines. Located in the heart of the Central Luzon region, Clark is part of Pampanga province, bounded on the north by Tarlac and Nueva Ecija, Bulacan on the east, on the south by Bataan, and on the west by Zambales.

Almost the size of Singapore, Clark occupies over 33,000 hectares of land and is a natural entry point to the Asia Pacific Region, with only 3 ½ hours flying time away from Hong Kong, Taiwan, Singapore, Japan, Korea and other key points in Asia.

As a former US Air Force base abandoned in 1991, the Clark Freeport Zone, under the Clark Development Corporation (CDC) and Clark International Airport Corporation (CIAC), serves as one of the region’s key economic hubs and employment generators. Clark possesses around 4,400 hectares of modern infrastructure facilities, with an attractive fiscal and non-fiscal incentives regime that has positioned it as the highest-earning special economic zone (SEZ) in the country.

At the end of 2016, Clark has signed 71 lease agreements committing around $1.02 billion of investment over the next 10 years — nearly triple the amount it recorded in 2015. At the same time, Clark hosted 895 locators, a 6% jump from the previous year, close to double the 464 locators it had in 2010, and employed over 90,000 workers.

With Clark taking point, Central Luzon could see itself becoming an even bigger contributor to the country’s growth.

Central Luzon as an economic power

Central Luzon, or Region III, is already poised to become the country’s next economic hub. According to the Commission on Audit’s 2015 ‘Annual Financial Report for LGUs’, the region is the third-highest contributor to national GDP, with Bulacan and Nueva Ecija ranking among the top ten earning provinces. Central Luzon also has the advantage of manpower, with a population of 11.2m people in 2015, and around 220 colleges and universities, the highest number of higher education institutions outside of Metro Manila.

There are also a number of unique advantages that the region can offer businesses. Oxford Business Group wrote in an analysis on its Web site, “Central Luzon’s strength lies in its unique advantages, namely that it is strategically located in the middle of the Luzon island, it is distant from any major fault lines, and is protected from typhoons by the surrounding Zambales and Sierra Madre mountain ranges.”

“It enjoys a thriving local economy, and is well connected through existing and future road networks to the rest of the country. All these factors have raised the region’s profile as an investment destination and set its course on a path towards industrialization.”

Keeping connected

Of course, this new economic hub will not be much of a gateway without easy access. The efficient transport of goods, services and people are all needed for a region to thrive. Luckily, Clark is accessible within 45 minutes by sea via the Port of Subic Bay, another major asset of Central Luzon.

“With a capacity of 600,000 twenty-foot equivalent units and a deeper berth than the Port of Manila, it is a highly attractive gateway,” the Oxford Business Group wrote.

“By land, Central Luzon is accessible via the North Luzon Expressway (NLEX), the Subic-Clark-Tarlac Expressway and the Tarlac-Pangasinan-La Union Expressway, which connect Clark to Metro Manila, the Subic Bay Freeport Area and the northern provinces of Luzon, respectively.”

Additionally, access to Clark will be improved with the NLEX-South Luzon Expressway Connector Road Project, which was awarded in September 2016 and will be undertaken by Metro Pacific Tollways. The project aims to construct an 8-km elevated highway connecting Caloocan to Manila, reducing travel time from the SLEX to NLEX from two hours to 20 minutes, and providing direct connectivity from Central Luzon to the southern provinces upon its completion by 2020. A second connector toll road backed by Philippine conglomerate San Miguel is also under construction.

As part of President Rodrigo Duterte’s priority infrastructure projects, there are also two new major railway projects highlighted for development that will positively impact Central Luzon’s connectivity. The first of the projects is a $2.88-billion, 38-km proposed railway from Tutuban in Manila to Malolos in Bulacan province.

Once these projects see fruition, not only will the congestion in Metro Manila ease, but an entire new region ripe for growth will rise to prominence. The Philippines has already been enjoying the international limelight as the next tiger in Asia for some time now, and soon Central Luzon might join in the action. — Bjorn Biel M. Beltran